South Korea’s Financial Services Commission (FSC) has surprised many with its new guidelines on non-fungible tokens (NFTs). The regulatory authority has made a significant change in the status of NFTs, treating some as regular cryptocurrencies under specific conditions.
According to reports from Yonhap news agency, the FSC will now categorize certain NFTs as regular cryptocurrencies if they lose their unique characteristics and display traits such as mass production, fungibility, fragmentation, or usage for payments. On the other hand, NFTs that are non-transferable and hold little economic value, like proof-of-transaction tokens or event tickets, will remain classified as regular NFTs.
An FSC spokesperson mentioned that approximately one million NFTs have been issued as collectibles, allowing them to be traded and used as payment methods similar to cryptocurrencies. However, the classification of NFTs will be assessed on a case-by-case basis, with no fixed standard for interpretation.
The new guidelines also suggest that an NFT could be considered as a financial security if it meets the criteria outlined in South Korea’s Capital Markets Law. These developments precede the implementation of the Virtual Asset User Protection Act, the country’s initial regulatory framework focused on cryptocurrencies, set to take full effect on July 19. This legislation aims to combat illicit market activities in the crypto sector, including market manipulation and fraudulent transactions.
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